Thank you for standing by, and welcome to the Superloop FY 2022 results conference call. All participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Paul Tyler, Managing Director and CEO. Please go ahead.
Morning, all, and thanks for joining us. Welcome to Superloop's financial year 2022 results, which I'm very pleased to present. It's an overused term, the word transformational, but I think we can quite happily call this year that's just gone truly a transformational year for Superloop. I'm Paul Tyler, the MD and CEO of Superloop, and with me, I have Luke Oxenham, our CFO. If we go to the highlights, what we'll be talking about today is around these sort of five key themes, revenue, EBITDA, cash, strategy, and the outlook. We're really quite delighted with the way the year has turned out around these elements.
From a revenue perspective, we saw a huge growth there in terms of the top line, obviously supported through M&A, but with really credible organic growth that underpins it. Similarly, from the EBITDA perspective, a highlight there being that we've been guiding for some time now in our AUD 23 million-AUD 25 million EBITDA for the year. We're pleased to bring the full year in above guidance at that AUD 25.4 million. Our cash conversion continues to be strong there in the mid-80s%, and we'll come back to each of these points, but very happy that we continue to see strong cash generation in our business. We'll touch on the strategy of the organization. I'll just remind the listeners that we're at the midway point now in our three-year turnaround.
We launched the turnaround plan at the beginning of 2021, calendar year 2021. We're at that midway point. We've seen a huge amount of progress during the first 18 months, and we have a really strong outlook from here. We'll give some reflections on the outlook from here coming into Q1 2023, which has started with a really strong momentum, which I'll touch on. Let's jump to revenue. Starting with the overall revenue coming in at over AUD 262 million. AUD 262.5 million of revenue for the full year.
A very credible or attractive set of numbers there, a 137% increase, a AUD 151 million increase on the previous year. Now, of course, that was largely fueled through M&A, through the acquisition of Exetel. We did see strong organic growth in the business in the order of 17%. Very credible underlying organic growth also being delivered. What's also encouraging is we're seeing that growth coming from all three customer segments. The consumer segment, of course, supported by the addition of the Exetel consumer base, but 41% organic consumer subscriber growth during the period as well. The business segment similarly supported by the business contribution from Exetel.
Of course, the Superloop historical business segment was more about larger businesses, and Exetel has brought small and medium businesses into the fold. There's some great numbers showing up there, which we'll come back to. Wholesale, which was, of course, an organic story, not supported by M&A, showing a 21% growth there to AUD 38 million in overall revenue. Strong revenue across all three segments, and most importantly, not just fueled by M&A, but with you know, a very credible underlying organic growth story for you. Jumping to EBITDA. Again, as I said, very happy that we've been able to bring the full year above the top end of guidance.
In a year of an incredible amount of moving parts, transformation, integration, bringing two organizations together, still seeing that performance over the top end of guidance was very pleasing, and I'm very thankful to the team for the discipline they showed throughout the year. AUD 25.4 million EBITDA for the full year, up 37%. At a gross margin level for each of the segments, we've highlighted the numbers here. I'll come back to margin quality later on in the presentation. That was an area at the half that we were aiming to continue to increase, and we've done very well there, so I'll come back to that. You can see at an absolute gross margin level there, strong margin growth in all three segments.
Very credible and I'm quite happy with that. Cash. Cash, of course, is and will always continue to be a strong focus of the business. Pleased to see that the normalized operating cash flow for the business has actually increased year-over-year. Coming in there at AUD 21 million, 14% up on the previous year. The cash conversion we have maintained in the 80% range, which is obviously a slight increase on the previous year, but a very credible cash conversion rate leading to or supporting that strong net cash position that we've been maintaining.
Obviously, a lot of the net cash position, most of the net cash position has been supported through the monetization of Singapore and Hong Kong, which had AUD 125 million cash injection during the year, as we know. But we've been maintaining a strong cash balance there, which has given us a lot of opportunities and a lot of options that we'll touch on during the presentation. The cash position has allowed us to invest in our business organically, and allowed us to invest inorganically. We'll continue to do both those things into the future.
We're also at a point where, given that, we have a strong cash position, given that we think that there is great buying in our own stock, we've been able to undertake a, buyback, commence a buyback of up to 10% of the stock. We've been, buying some shares on market, and we'll continue that program throughout the year. Okay, let me touch on the strategy. In January 2021, we set out this accelerated growth plan for the business. That growth plan was around a number of things. Of course, increasing the operating leverage on the platform being the primary one. We want to fuel the challenger segment. That's all the non-traditional telcos or the non-top four incumbents. We wanna be a big part of fueling that challenger segment towards accumulative 30% market share.
That was an aspiration. When we put this aspiration or vision into the market, the market share was 8%, back in November last year. It had doubled over the previous 18 months, and in the time since then, the most recent ACCC report suggests that the challenger market cumulative challenger market share is now around 12.6%. That vision is being fulfilled. The non-traditional telcos are taking share and significant share if you look at the way the ACCC report has laid out those market shares. We wanna do that through leveraging our infrastructure on demand platform. That is the platform that combines our physical asset, our fiber, together with our investments in software, in automation, to really make our platform easy to use, easy to consume, a great product at a very competitive operating cost.
Of course, we wanna build scale on a largely underutilized platform, improve margins, and drive a greater customer share and then customer satisfaction across all of our segments. They're the objectives that we set out. How did we do in FY 2022? Well, I would claim we did exceptionally well. You can see a number of those major milestones, significant progress made towards. We embedded that accelerated growth strategy deeply across our business. Not an easy thing to do in a world in which we're putting together. We're trying to do a cultural integration of many disparate subgroups. We've done it, and I can see the fruits of that every day.
We've also repositioned our business very clearly around three distinct market segments, and they're market segments of scale and of opportunity. Those segments being our consumer segment, our business segment, and our wholesale segment. Part of the reason we've done that is to increase the clarity of our business, to simplify our business, to give transparency to the market of how our business is performing, traction we're making, and the outlook from here. As a result of that, we're able to demonstrate strong organic growth in each of those three segments, with new products being launched in each of those three segments, and I'll come back to that. We've seen that organic momentum accelerated through accretive M&A, as well as the divestment of Singapore and Hong Kong. We have invested significantly in improving and integrating our systems and workflows across the business.
We have strengthened our balance sheet materially, and we've continued, in fact, pretty much completed the leadership renewal in the business. We believe our strategy is now clear and simple. We're leveraging that high-quality telecoms infrastructure asset to support those challenges. We've made a huge amount of progress through that plan during the year that's gone by. There's more work to do, of course. As we look out towards financial year 2023, we'll have similar areas of focus. Of course, we wanna continue to improve our margins. I'll come back to those segment margins shortly. We wanna continue to drive cost out of our business, drive efficiency, improve processes, continue to invest in the simplification of our underlying systems.
We're going to actually increase the investment in organic growth as we come into FY 2023 on the back of a great outcome from the investment in FY 2022. We will continue to evaluate M&A opportunities where we see accretive on-strategy opportunities in the marketplace that are appropriate for us. We'll continue to prosecute the on-market buyback during the year. We're gonna do some pretty cool stuff around brand, the brand relaunch that will be coming later in the year. Continue to keep focus on cash generation out of the business. One part of the business that has not performed to the level that we would like is our fixed wireless asset. During the coming year, we will undertake a strategic review of that asset. A lot of progress around a very simple strategy, a lot of optimism for where FY 2023 is gonna take us.
Just wanna touch on two particular investments we made during the year. Of course, where we buy, where we do M&A, we wanna make sure it's not just on strategy at the start, we wanna make sure that we're able to demonstrate the success of that acquisition. If we start with the Exetel acquisition, I think we can very credibly argue that this was a very successful acquisition. We purchased Exetel for AUD 110 million at the end of July 2021, added some 110,000 customers between consumer and business. It contributed a lot of revenue and profitability into the business. The price that we paid for Exetel was a fully priced 10x.
We knew that at the time, and the justification that made that 10x multiple a more sensible multiple for us was we highlighted AUD 5 million worth of synergies we wanted to take out of the run rate. That was embedded in the business case that we put in place to, when we looked at Exetel. Very pleased that we've been able to deliver not just the AUD 5 million of run rate savings, but we delivered more than AUD 6 million of run rate savings. If we put that into post-synergy multiples, our business case said that we should effectively be looking at a 6.9x on a contributed EBITDA basis.
Actually, we can see with the overachievement of synergies that we'll pay no more than 6.5x , which is getting into a very credible territory as you can imagine. The network integration, the migration of all services to the Superloop network went exceptionally well, which obviously has led to a lot of those synergies. We also acquired a lot of new capability, which has been really valuable and will continue to be valuable to the broader group, such as our offshore capability in Sri Lanka. Not just for contact centers, but for many types of tasks and roles that gives us a really strong cost base into the future. When we purchased the asset, the subscriber base was in decline. We were very aware of that. We discussed it openly.
We're very happy that during the year, we've been able to arrest that decline. In fact, reverse the decline into a net growth territory during the second half. We're calling the investment business case for Exetel running comfortably ahead of plan. Acurus, more recently acquired, doesn't have a lot of track record in the business, obviously only acquired in late June 2022. I'm pleased to see that it is on track at this stage. I remember, I remind you the reason we've acquired Acurus is not so much around a synergy-based multiple, but it's around channel expansion. This is an asset that allows us to expand our target market share for our wholesale offerings.
Our target market, sorry, for our wholesale offerings beyond just traditional telcos and into all brands, all mainstream brands in Australia who would like to look at a broadband offering as part of their core proposition under their own brand. Examples of that being Officeworks and EnergyAustralia, who are currently offering broadband propos ition under their own brand, supported now by Superloop. Very optimistic about where that acquisition will take us in FY 2023. It's probably the last time we will refer to Exetel as a standalone business because now we're operating it as very much an integrated business within the broader group. Okay. If I jump to the three segments, I'll start first with the consumer segment. The consumer segment had a great year. Very strong organic growth there, over 17,000 subscribers net added to the platform.
Around about 40% uplift on an organic basis. Significantly supported through the M&A of Exetel as of course you're well aware. There were a couple of dynamics that we really took a focus to this year as a result of that. One was profitability. When we brought the Exetel platform onto our business, of course, it diluted the gross margin. We were doing around about 27% gross margin in the traditional Superloop consumer business. The Exetel gross margin was a lot more diluted, and that brought our first half gross margin down to just under 21%. We did communicate in the half year that our aspiration was to return that back to our long-term target gross margin levels of 25%.
Very pleased that we were being able to do that in the second half. Obviously, that was through the work of achieving the synergies, which I've discussed many a time. Also, we had a lot of focus on cost to serve, and we've been able to take around about 10% out of our cost to serve year-on-year, leading to that really strong gross margin control or recovery there at over 25%. Very happy with that. In terms of customer acquisition, we were acquiring on a, you know, on a net basis company throughout the year, but we saw an acceleration towards the second half, and I'm pleased that that acceleration has continued into FY 2023. I'll come back to that when we get to the outlook.
We've also been doing a lot of work within the business around some innovations and customer experience. Innovations such as the Flip to Fiber initiative. That's where fiber to the node users can move to a fiber service or no upfront charge. Superloop is operating well above its traditional market share there in terms of the number of successful additions on that using that discontinuity.
Also product innovation such as My Speed Boost, which is completely unique in the market, and it shows the strength of our automation, where we're able to offer our customers the ability to increase their speed up to doubling their speed through the push of a button in their portal on a daily basis for those times where they want to just increase their speed on a temporary basis. Seen really strong feedback from those two innovations to that thing. In terms of the customer experience, we did undertake a significant network resilience program dating back over the last year, where we've added that second fiber to all the NBN points of interconnect to ensure that we have a dual home diverse fiber to every point of interconnect to ensure a much more robust service.
We can see that in the stability of the network and the ongoing customer satisfaction. The consumer business has had a great year. Clearly, you can see the improvement in financials there, and on the top line, the gross margin line on an absolute basis, and also at the bottom line. If I jump to the business segment. The business segment similarly has seen a significant improvement as we've gone from first half to second half. The first half of the year afflicted by the remaining COVID impacts, particularly on things such as the student Wi-Fi business, particularly on SMB segments, as people have been working from home and not retesting their supplier engines. Into the second half, we saw a significant improvement in that output.
I'll come back to that in a sec. We've been questioned a number of times around, what is the business segment? You know, help us, demystify it a little bit. In the table on the bottom right on this chart, we sort of reflect on the way we look at the business segment, which is pretty traditional. We look at it through the lens of three distinct sub-segments. A small, less than 20 employees sub-segment, a medium, 20 to 200 employees, and then large, greater than 200 employees. The go-to-market is different for each of those segments. On the small side, it's a digital sale, much more akin to our consumer business. On the large side, it's person-person sale, much more akin to our wholesale business.
A lot of obviously synergy that's available to us through those similarities. We've laid out the sort of products that we offer into each of those segments there to give you a better understanding and how the revenue is distributed between each of those segments. You can see on the bottom line of that bottom right chart. As we came into the second half of the year, we started to see a recovery, for instance, in student accommodation business. We now see the number of beds supported under our managed Wi-Fi returning to pre-COVID levels. We started to see much more of an uptick in demand for our business products.
Married that with the product innovations we've launched, such as the partnership with Palo Alto on really market-leading security propositions in the SD-WAN and SASE space. You can see a recovery in the gross margin for that business, notwithstanding the continued decline in the underlying fixed wireless business, but a recovery in the gross margin quality coming into the second half. That recovery is something we'll continue to push into the coming year. We've had during the as part of the full year results now looked at the goodwill that's carried particularly in the business segment here that is associated with the fixed wireless business. It's something that really dates back to the BigAir acquisition dating back to 2016.
It's not current, it's not impacting cash, but we have taken an impairment on the carrying value of that fixed wireless business. Luke will cover some more about that later in the presentation. Okay, on the wholesale segment. The wholesale segment is an organic story. As I said, we've seen the re-signs of a number of key customers there, obviously the onboarding of Acurus. If we start with perhaps the biggest innovation that we had during the year, which was the Superloop Connect platform. As I've mentioned a number of times, we launched that back in September 2021, and that's the platform that provides broadband aggregation services to market.
That's where we take all the complexity of our traditional fees and speeds and telco solutions, and we marry it with the automation that we've invested so heavily in and provide an as-a-service consumption model for broadband for our wholesale customers of our broadband. That's been growing very quickly. It's grown from a standing start in September 2021. We finished the period at around about 20,000 subscribers. In fact, over 20,000 subscribers on that platform. We've now gone and purchased Acurus. The point of purchasing Acurus is to expand the addressable market for that broadband aggregation platform beyond just traditional telcos, and now to all manner of brands, as I said. EnergyAustralia and Officeworks being the first examples.
Very happy we've been able to bring all of the traffic across from Acurus onto our platform now since within days of the acquisition completing. Going very well there. Very credible growth in the wholesale segment, as you can see, over 20% organic growth year-on-year. Okay. We've been asked many times about our network, our capacity, and our headroom, and we've tried to give a crude but still illustrative picture on how the network is utilized. With the addition of all the subscribers on our platform, we now, as is highlighted on this slide, We're carrying around about 200,000, a little bit over 200,000 subscribers on the platform.
We have said that we believe our platform within the capital envelope, the AUD 20 million a year capital envelope that we assume on an ongoing basis, as a maintenance investment. We've assumed that our platform, or modeled that our platform can support up to 1 million, perhaps beyond 1 million subscribers. On that basis, it is a crude basis, but on that basis, we see our platform as in the order of 20% utilized. We're now crossing kind of the 2% market share of the NBN market, obviously still very small, growing very quickly, of course, but still less than half of our target market share of 5% for our retail price. Okay. With that, I'll hand over to Luke for the financials .
Thanks, Paul. I'd just like to add my thanks and welcome to everybody who's on the call today as well. We really appreciate your interest in Superloop. This is my first presentation of a full year set of results for the company, and certainly, 2022 has been a baptism of fire. I've had to incorporate two acquisitions that were made during the year and obviously one divestment as well. Just wanted to acknowledge from an investor perspective that it does make it a little bit more complex to understand the results. The purpose of my presentation today is hopefully to talk you through in a little bit more clarity, some of the things that we've seen in terms of financial performance in the business over the course of this year.
As Paul mentioned already, and I'll just sort of highlight the point, we do in this presentation today want to speak a little bit about the performance between Superloop and Exetel and hopefully highlight to you just how successful the Exetel acquisition has been. On an ongoing basis moving forward, as we do internally, we're very integrated in terms of the Superloop and Exetel business, and so we will start to only present numbers on the basis of consumer business and wholesale without this disaggregation. If we begin with revenue, as Paul's already mentioned, it does include, obviously, the Exetel acquisition. We had a 137% increase in revenue compared to last year. The total revenue performance also includes the revenue generated from the discontinued operations of Hong Kong and Singapore.
What I wanna do on this slide is provide a little bit of deeper insight into each of the operating segments on the business. From the consumer perspective, the last four halves, and consequently the last two years, have produced stellar growth. We're obviously coming off a low base, but as we will discuss in a couple of slides' time, the increased investment in marketing and organic growth have certainly paid dividends from a revenue growth perspective. Looking at the wholesale division next, the business is clear of any acquisition impacts, and the 21% growth year-on-year is a great outcome in a more mature business. The key to success in the wholesale segment has no doubt been the introduction of the new wholesale aggregation product, Superloop Connect.
As we've seen already, this has gone from zero to over 20,000 subscribers in the space of nine months. Since year-end, we've now successfully migrated almost an additional 5,000 subscribers, some of which are related to the Acurus white label platform. Lastly, though, let us talk about the business segment. There's a little bit more going on here. I wanna talk you through the trends to help you understand what we have been seeing internally. It's no doubt that the business segment has experienced more headwinds than the other segments over the last couple of years. Firstly, the first half of FY 2021 was the last half that the group saw revenue and gross margin from the CMS or managed services business that was closed down.
In that half, that business had revenues of AUD 2.2 million, which fell to zero in the second half of FY 2021 and has been zero since. Secondly, and Paul's alluded to it, the bulk of the group's fixed wireless customer base was also reported in this segment. As we've highlighted in previous results, the fixed wireless product has been declining in usage and consequently revenue. Between FY 2021 and FY 2022, fixed wireless revenues fell from around AUD 10 million in FY 2021 to only around AUD 6.5 million in FY 2022. The business segment also contains the group's managed Wi-Fi student accommodation business, and the impacts of COVID have definitely been felt in the last two financial years.
Finally, we can't ignore the fact that a decision taken back in 2019 around that managed services business not only impacted the services revenue, but there were flow-on impacts to the business segment, not only in reduced revenue, but also in reduced resources and reduced sales presence. Since I've joined the business, Dean Tognella and his team have begun to rebuild the experience and capability of the sales team. From where I sit, the pleasing signs are in the half-on-half improvement in this financial year, and in particular, the sales and revenue momentum that the division exits the year with.
Obviously, the acquisition of Exetel has been a great boost in the small and medium end of the business segment, but the reinvigoration of the sales effort in the business space gives me and the rest of us in the executive team a lot of confidence heading into FY 2023 in terms of the prospects for the business segment. Let's take a look at gross margin. What we've got here on slide 15 is hopefully a helpful waterfall chart designed to show you the movement in gross margin, firstly in the Superloop business on a standalone basis on the left-hand side. Then overlay with the impact of the Exetel acquisition on the right. If we begin at the very left bar, this is the attribution of gross margin across each of the old Superloop components in financial year 2021.
This is quite obviously skewed towards the wholesale and international businesses, which contributed AUD 30.5 million, or almost 60% of the gross margin of the group last year. After stripping out the CMS business, you can see there has been solid gross margin growth contributions from both the consumer and wholesale segments, reflecting strong top-line growth in those areas. Obviously, the business segment did go backward in FY 2022 compared to FY 2021. This is almost entirely a consequence of the decline in fixed wireless revenues. Putting all of this together for Superloop standalone, there was modest growth in gross margin in the year, up from AUD 52.2 million to AUD 54.5 million. Clearly, the Exetel acquisition has provided the paradigm shift in the gross margin story. Admittedly, the Exetel consumer result benefited from roughly AUD 4 million of in-year synergy benefits.
The real power of this slide for me, though, is the FY 2022 bar on the right-hand side. The relatively even split of margin contribution from across the group demonstrates the power of the strategic rationale for the Exetel transaction. Diversity of margin contribution provides a natural hedge against changing dynamics in any one of our three customer segments. For the time being, we've ambitions to grow all three segments as strongly as we can moving forward. But the beauty of the business model is that when necessary, we can ramp up or ramp down the investment we make into each of the segments in response to potentially changing return profiles. Bringing all of that together on slide 16, we show a relatively simplified bridge of the EBITDA growth between FY 2021 and FY 20 22.
The left-hand side rebase is FY 2021 for the one-off impacts of both the CMS business and the JobKeeper benefits that were received in that year. This rebase number is underlying EBITDA of AUD 14.4 million. On the right-hand side, we've isolated a couple of components of the EBITDA growth. In particular, in Exetel synergies of AUD 4 million that were delivered in-year and across both Superloop and Exetel, we spent an additional AUD 6 million in marketing this year compared to last. On a headline basis, EBITDA grew 37%, which is a very pleasing outcome, and as Paul has mentioned already, ahead of the market guidance we have provided. The growth is even more impressive when you consider the non-recurring nature of those couple of items in FY 2021.
What's most pleasing to me in my first year with the group is that during FY 2022, while not on this chart, we've also been able to provision an additional AUD 1.7 million in expected credit losses, which from my perspective, provides a greater level of comfort around the company's buffer with which to absorb economic fluctuations moving forward. If we jump onto slide 17 is a more detailed income statement. I've spoken already about a number of the moving parts above the EBITDA line, so I wanted to use this slide to talk about some of the below-the-line non-cash items. In particular, the accounting for the divestment of Hong Kong and Singapore, as well as the impairment of goodwill that we've booked in these results. Let's start with the impairment.
From an accounting perspective, we are required each year to test the carrying value of our assets, in particular goodwill, against the estimated value in use that we derive from our internal valuation analysis. The accounting standards require us to do this at the level of our cash-generating units or CGUs. In FY 2022, we've changed our CGUs to reflect the operating segments that we report in our accounts and to the market, which are in turn the operating segments that we manage the business by. The impairment we've taken this year, as Paul's already mentioned, has been against the business segment. As we've already alluded to, the biggest influencing factor in terms of the changing valuation of the business segment has been a revised outlook for the cash flows stemming from the fixed wireless product.
While it's also true that other valuation inputs such as increased WACC have moved against us, the change in cash flow projections for the fixed wireless business is the biggest factor. It's never an easy situation to recommend to the board that an impairment be taken, but as I went through this valuation process for the first time, it's definitely something that is appropriate, and in my view, it goes without saying that it rebases the goodwill of the business onto a very solid foundation. The other significant factor below the line is the accounting for the disposal of the Hong Kong and Singapore assets. At the time of the disposal, we provided a preliminary estimate to the market that the gain on sale would be in the order of AUD 32 million.
Pleasingly, as we worked through the divestment exercise, the gain on sale has landed on a gross basis at AUD 46.6 million. When we announced the disposal, we did also highlight that the final gain on sale would be subject to whatever level of goodwill was to be derecognized in conjunction with the sale. In finalizing the accounting, we have also concluded that it's appropriate to derecognize AUD 35.1 million of goodwill, which does offset the gross gain on sale and results in a net final gain on sale of AUD 11.5 million. Jumping to the next slide, we're gonna change pace a little bit now. I wanted to spend some time talking about the return on our increased investment in organic growth in FY 2022.
We're certainly aware from conversations that we've had that this is very much a topic of interest across the market. The chart on the left-hand side shows the gross new subscribers added in our consumer segment over the course of financial year 2022. As Paul mentioned, Exetel did have a slow start, but since the turn of the calendar year, we began to see improved performance and increased growth in the Exetel business. Overall, the performance throughout the year was very consistent, and although you won't be able to decipher with precision the cost of acquisition from these charts, you will see that the AUD 8.3 million of marketing spend this year did yield excellent growth subscriber numbers at a cost per subscriber, which is, in our view, substantially below that of our peers.
Based on the expected ARPU and gross margin outcomes, we expect to be able to break even on our marketing spend within about seven to eight months . In our internal analysis, we apply a combined group assumption around the churn level of just over 2% per month, which we believe is comparable to industry average. Using these inputs, as we evaluate the cohort of business that we have acquired in FY 2022, we estimate that the marketing spend will deliver in excess of a 16% return on our invested capital. It is these metrics which give us confidence that a further investment in organic growth is a sensible one for us to pursue, and as such, we have committed to an increased marketing spend in financial year 2023.
The next topic of conversation, again, is another one that we know people are particularly focused on in relation to Superloop, and that's cash flow. What we've presented here is a reconciliation of the apparent operating cash flow that you'll see in the financial statements, normalized in order to present, which is, in my view, a more straightforward picture of the cash generated in the business in financial year 2022 that was derived from the sales, revenue, and expenses that related to financial year 2022. Firstly, starting at the top, and obviously, the operating cash flow in the accounts is an outflow of AUD 11.5 million. We believe it's appropriate to adjust for the transaction cost of AUD 7.5 million associated with the various transactions throughout the course of the year.
These items are not expected to recur in FY 2023, obviously, at this level. Next are a couple of items that we spoke about at the half-year result. Two cash outflows that fell into the operating cash flow statement but did not relate to the FY 2022 performance of the group. These working capital costs, one tax and one related to carryover network costs from Exetel, were paid by Superloop after the first of August, but both related to carry forward liabilities of Exetel. They were both adjusted for in the completion accounts, but unfortunately, those adjustments are not offset in the operating cash flow. They have fallen into the investing cash flow line. In the year, we also undertook a recalibration of the supplier payment profile of the group.
As at 30 June FY 2021, the Superloop business was carrying, in my view, an abnormally high level of trade creditors. On average, those trade creditors were aged 89 days against the vast majority who had 30 days or less payment terms. In FY 2022, we've cleared out this position and paid AUD 12.4 million of invoices relating to FY 2021 EBITDA outcome. I'm far happier now that the average outstanding days of our trade creditors as at 30 June 2022 is 25 days. Additionally, we also find ourselves in a position that we're able to benefit from the economies of scale and cost savings by making a number of prepayments as at 30 June 2022. We've increased our level of prepayments by AUD 4.4 million for expenses that will be accounted for in EBITDA in FY 2023.
The net of all of this is a normalized cash generation in FY 2022 of AUD 21.2 million, which represents 84.4% of the underlying EBITDA reported by the group for the year. Coming to the balance sheet very briefly, this slide presents a snapshot of the balance sheet at the end of the year. Most notable changes are obviously the reduction in assets as a consequence of the disposal of Singapore and Hong Kong in the second line, property, plant, and equipment. The other thing to note is that we have repaid debt during the year. From a debt covenant perspective, are well within the parameters of our lending facility, having a negative leverage ratio, a very modest gearing ratio of 8.9%, and a very comfortable interest coverage ratio of 6.6x .
Turning to slide 21, while we're on the subject of capital and balance sheet, we finished the year in a very solid cash position. Net cash of AUD 42.8 million and an undrawn debt facility of approximately AUD 50 million. From a growth perspective, we are evaluating a couple of opportunities at present. Even accounting for them coming to fruition, we remain in an excess capital position, and consequently, we announced an on-market buyback of up to 10% of our issued capital. We began the buyback in mid-July and have bought back a small portion of our target at this stage, but our intention in FY 2023 is to continue buying under that program.
Lastly from me, before I hand back to Paul, I just wanted to make some comments about the way in which we're thinking about profitability as we head into financial year 2023 for the business. I know from conversations with our investors, many people like to be able to build that bridge to understand what FY 2023 should look like. We thought we'd give some pointers to help you undertake those calculations. On the plus side, for FY 2023, we can begin with a full-year contribution from the acquisition of Acurus. I think for the first time since we announced the transaction, we've put a number on our expectation of EBITDA performance in FY 2023 at AUD 2.5 million.
Secondly, there's gonna be a full year obviously of the Exetel synergies, which from an annualized point of view, we are running at around about AUD 500,000 a month or AUD 6 million for the year. That does compare to obviously only AUD 4 million of synergies that actually were booked and fell into the financial year 2022 outcome. As I mentioned, and as Paul has alluded to as well, we continue to focus on organic growth in the business, and we're expecting to deliver another year of very strong organic growth. We are expecting to focus on improvements where possible in increasing the gross margin of that business as we move forward.
It's worthwhile thinking about some things on the flip side of that equation, though, and some of the things on the downside that we think about is the fact that we will no longer have a contribution from the discontinued operations in FY 2023. Just a reminder, the contribution from discontinued operations in FY 2022 is AUD 4.9 million of EBITDA. As we've talked about already on the back of a very successful year in consumer growth, we will be investing additional money in the order of AUD 5 million to the marketing cause in FY 2023. It's worth noting that some of this increased marketing spend will be directed to the business segment to continue to drive growth in the SMB and medium corporate market.
On a smaller scale, with the replacement of our software as a service, CyberHound product with a new CyberEdge product, the accounting treatment for the new product will change to a more over time contribution. That's likely to impact the EBITDA line by an amount close to AUD 2 million in FY 2023. With that, let me hand you back to Paul to comment on the outlook and some closing comments.
Thanks, Luke. In terms of outlook, we wanna continue the growth momentum, very simply. We've had, you know, incredible growth momentum in the year gone. As we've come into the first quarter of this year, I'm very pleased to see that that momentum is continued. We've said that we're gonna invest additional marketing in the coming year. If I give you some, you know, an indication of the success of that. In FY 2022, we added, as I said, just over 17,000 net subscribers. In the first two months of this year, we've added over 9,000 net subscribers to the platform. The momentum is building, and we're very, very pleased with the way that's going.
We expect that to continue into the future, and we have the financial capacity to continue to support that growth. We're gonna continue to work on costs. We're gonna continue to integrate the acquisitions we've made, continue to invest in the transformation of the business at systems, processes, and workflow level to take cost out of the business. We have the balance sheet that allows us to continue to explore inorganic opportunities. We are exploring a couple of inorganic opportunities at the moment. They may or may not result in transactions, and we've explored a number in FY 2022 that didn't. We will buy very prudently, if we buy at all. We'll have to be on strategy, accretive, and appropriately priced, as we've always said, to ensure that we really do undertake disciplined M&A.
We'll continue to use that capital to execute the buyback as and when appropriate. I'm really pleased with the way FY 2022 has gone, and I'm really optimistic about FY 2023. I'd very much like to thank the board of Superloop. I'd like to thank the executives of Superloop. I'd like to thank the broader organization and our shareholders for your support during the year. It's been an incredible year for the company, a real watershed year, and we feel really optimistic about where we're going from here. With that, I'll hand over to questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Bob Chen from J.P. Morgan. Please go ahead.
Morning, Paul and Luke. Just a few questions from me. Maybe just flicking back to that slide 22 with the FY 2023 EBITDA considerations. I mean, given you delivered a second half EBITDA of AUD 14 million, can we sort of annualize that to get sort of a AUD 28 million base for 2023 and then add all these little components in? Is that the way to think about your FY 2023 outlook?
Yeah. Sorry, Bob. The way I would think about it, I guess maybe I'm not answering your question sort of specifically, but the way I would think about it is to start with the AUD 25.5, and then to think about these sort of various components and the ups and downs that they would provide. You look at the Acurus acquisition, to your point, would give you an additional AUD 2.5. You would then get an additional to a couple of million from the Exetel synergies. You know, obviously, we sort of leave it up to analysts to make some inferences in relation to potential growth and gross margin that we can deliver on that. That sort of gets you to a number, I guess, from the starting point of around AUD 30 thereabout.
You sort of think about what you need to sort of adjust down for, obviously, the discontinued operations, the increased marketing spend as well, and as I mentioned, the impact from a CyberHound perspective as well. Appreciate that there's sort of swings and roundabouts and ups and downs on both sides of the equation there. You know, ultimately, we are of a view that there will be growth in that outcome in FY 2023. Hopefully, sort of as you go through that sort of thought process in waterfall, you'll be able to come up with a similar answer. We're not giving formal guidance. As we come towards the AGM, we'll look at giving a more ultimate trading update, Bob.
At this stage, we'll leave it as described in the deck.
Great. No worries. Thanks for the color. Just in terms of sort of trading to date and that comment that you've added 9,000 net subscribers over the last couple of months, I mean, is that a reflection of some of the increased marketing spend that you've put in? Also, like, can we assume that's the run rate for the balance of the year, or is there a bit of seasonality in terms of subscriber additions?
Not particularly seasonal. Obviously, as you come towards Christmas period, things change a little bit. No, I wouldn't say it's a seasonal business. Yes, marketing investment is part of it. Marketing efficiency is another. Competitive intensity is another. Product innovation is another. There are a lot of elements in it. We're very happy with the way that the year has started, you know, we really think we have the wind behind us now. We have a great product, a great customer experience. We have a building word of mouth. You know, we're not giving a guidance on how many subscribers for the year will be acquired.
Okay. Great. Thanks for that. Just a final one. Just with churn in consumer NBN, I think you made a comment earlier that, you know, the assumption that you guys are putting in is around that sort of 2% a month level. Where's the market at? You know, what's the difference between your 2% versus where the market's at?
That assumption was around the business case for the marketing investment, and that is where the market's at, just over 2% is kind of the market average. Our churn has fallen. We've been improving churn progressively throughout the year, and we intend to continue to improve actual churn in the year to come. At that 2% that Luke was talking about, that he was referring to was around the ROI we expect, and we've taken a reasonably conservative position there to ensure that we are getting the return on the investment as we make further investments in our organic business.
Great. Thanks, Paul and Luke.
Thanks, Bob.
Thank you. The next question comes from Nick Harris from Morgans. Please go ahead.
Hey, Paul and Luke. Thanks for the calls, and also thanks just for that slide on that sales and marketing return. I think it's really helpful and obviously justifies that continued growth in spend. I guess a couple questions from me. Luke, just on that slide 19, the cash flow, can you just elaborate a little bit more? I mean, are you basically normalizing your working capital because it had been, I guess, elongated in prior periods, so you're getting it back to a level that you want? Can you just explain that big swing there? And then sort of under that question, what are the benefits-
That is exactly the answer.
Got it. Back to a level that's reasonable because it might have been pushed.
If I just go back through it, at the end of FY 2021, and I guess, you know, different people take different perspective on these sorts of things in terms of, you know, what's appropriate. At the end of FY 2021, the trade creditors balance, in my view, was abnormally high, and that's evidenced by the fact that on average, those trade creditors, the aging of them, if you like, was around 89 days, when many of them actually had payment terms of 30 or even in some cases less than 30 days. Now at the end of FY 2022, we're back at a trade creditor sort of aging, for want of a better term, days of 25 days. Certainly, we have over the course of this year arrested that.
It is. You know, given the better or the stronger financial performance of the company, the stronger cash position of the company, I think it's appropriate that, you know, we are meeting our obligations in a timely fashion and ensuring that we have an appropriate sort of, you know, for want of a better term, reputation with our suppliers.
Gotcha. That makes sense. I guess the benefit is you're back on good terms. You should hopefully get some better purchasing power because you're paying in a timely manner, not late.
Exactly.
Got it. Just two parts to that, and then I'll ask some other questions. Just, I think you made a comment about impairing some credit losses. Was that through the P&L or the cash flow? And then the prepayments that you also called out, could you just elaborate on what that is and why you're prepaying?
Yeah, certainly. Well, firstly, to the first point, I did make the comment that we increased our expected credit loss provision over the course of the year. Again, you know, this is my first result. Certainly, what I observed in sort of picking up the pen was that, you know, for the business that we had, for the types of customers that we had and for the size of the revenue pipe that we had, I think at the time, the Superloop expected credit loss provision was AUD 400,000 at the end of FY 2022. I didn't feel like that was an appropriate number. Over the course of FY 2023, we have added to that balance, so we're in a much stronger position as we enter or as we end FY 2022 and move into FY 2023.
The amounts that we've increased the provision by is effectively an offset against revenue. Where you will see it will be an impact on EBITDA. And it doesn't impact the cash flow, but it is obviously an impact in terms of the reported EBITDA for the year. Just on the prepayment side, the second part of your question. In the past, there's been a number of things. I'll give you an example. This is not the only example where we have used supplier financing, for example, on purchasing all of the corporate insurances.
That has been a way to, you know, obviously for the business which has been in not as strong shape in previous years, it's been a way for the business to manage its cash flow, which is, you know, entirely appropriate and the right thing to do at that point in time. Again, to your earlier point, given that we're in a much stronger position now, it saves us in terms of cost of having that financed by our suppliers, but it also gives us some economies of scale and purchasing power if we actually go and pay those things up front as opposed to financing them. That's one example. There are a couple of other examples across the business where we've taken that approach as well.
Thanks, Luke. That's really helpful. I guess my interpretation of that is there's been a bit of, I guess, stretching the working capital out, and hopefully that's all been resolved now, so we should get more normalized operating cash flow, less funkiness going forward, for want of a better term. Is that a fair comment?
That's a very fair comment, Nick. Yeah.
Excellent. Thank you. Just, I guess, two other questions. Looking at your underlying EBITDA, obviously you beat the top end of guidance. From memory, you said you'd spend an extra AUD 5 million on sales and marketing, and I think you've spent an extra AUD 7 million. Am I doing something wrong in my math? Did you beat despite spending more on sales and marketing?
That's right, we did.
Excellent. Obviously that means the underlying stuff's going well. Just my last question, sorry, a bit more of an accounting one, but D&A going forward, obviously we take away Singapore and Hong Kong. We had some amortization for Exetel and, arguably, Acurus as well. Could you just give us a bit of the moving parts or help us understand or any comments on D&A in FY 2023 because it's such a big bit?
Sure, yeah. If you look at the accounts in a little bit more detail, what you'll see there is that the income, the face of the income statement represents the ongoing business excluding the sale of Singapore and Hong Kong. You'll see on the face of the income statement a D&A charge of around about AUD 44 million for FY 2022. When you look in the notes in the back of the accounts, you'll also see that we had a D&A charge related to Singapore and Hong Kong of around about AUD 7 million or thereabout. You know, combined D&A across the group, when you look at it on a combined basis, was AUD 52 million. On an ongoing basis it was AUD 44 million in FY 2022.
I would expect that you will see some decline in that number, but not significant. I mean, it would be within a sort of, you know, 90% of FY 2022's number would be a safe assumption in terms of FY 2023's assumption around depreciation and amortization.
Excellent. Thank you. I guess just the last question from me. Obviously you've had your buyback active, which you've just sort of parked ahead of this result, understandably. Just wondering, does that get reinstated soon-ish, or do we have to wait for your AGM on the assumption you provide some guidance at the AGM, before that buyback can be reengaged?
Look, it's a good question. There's plenty of moving parts in relation to consideration about buyback. Obviously, we did allude to the fact that we are, you know, evaluating some opportunities as well. That also needs to go into the mix as well as those other things that you mentioned about. Yeah, we prefer not to sort of flag when we are and aren't in the market from a buyback point of view, but all I can say is that from our perspective, we will consider all of our continuous disclosure obligations before we make any, transactions under the buyback, as we did before we commenced the buyback back in, mid-July.
Great. Thanks, Luke and Paul.
Thank you. Once again, to ask a question, please press star one on your phone. The next question comes from Cameron Bell from Canaccord Genuity. Please go ahead.
Hi, guys. I just had a couple of questions. On CyberHound accounting change, could you firstly just maybe explain what that is? I think I heard you say the EBITDA impact was AUD 2 million-AUD 3 million. Was that right?
No, it wasn't AUD 2 million-AUD 3 million. It was probably just under AUD 2 million. Between AUD 1.5 million and AUD 2 million, Cam, will be the EBITDA impact. CyberHound was a product that existed before the sort of revisions to AASB 15 and revenue recognition sort of principles that sat within that. And in all of CyberHound's life, when we have accounted for it, we've accounted for the entirety of the contract revenue on an upfront basis when we have signed the customer. If they've signed to a three-year contract, we've booked effectively the three revenue in year in association with that. Now, that was, I guess, you know, trying to find the right words for it, but that was probably, you know, on the edge of acceptability under AASB 15.
We, you know, have relooked at it now that we've relaunched CyberEdge and what CyberEdge is in terms of it being a software as a service product.
We believe the more appropriate thing to do from a revenue recognition point of view when we sell the CyberEdge product is to recognize the contractual revenue on a per monthly basis going forward.
Cam, can I just touch on that? I'll let Luke sort of talk to the accounting treatment of booking it up front versus booking it through a contract live. We launched CyberEdge, which is a completely new platform during the year. In fact, we only launched it in the last couple of months. It's landed really well. You know, obviously, you know we have a strong base of CyberHound, particularly in the education vertical across the market. This new product, you know, SASE as a service software platform is actually landing the market well. The sales momentum is strong. There's no erosion in business. In fact, there's an acceleration of the business. There is a change in the way that the revenue is being recognized, but it doesn't change the underlying health of the business.
Okay, great. Just on the GP growth, you had a pretty strong year in FY 2022. Do you think underlying GP growth is accelerating?
It was hard to hear the first part of your question, but if you're talking about gross margin trajectory, obviously at the half year, we talked about recovering the dilutive impact of Exetel. In the consumer segment, we set an aspiration of doing it within 12 months. Clearly, we did it within six months, getting back to that 25% gross margin. In the business segment, we said that would be in the mid-terms, so we didn't see ourselves getting back to the 40% kind of gross margin level in under a sort of a, kind of a two-year period. But we're making good progress towards that direction. In the wholesale segment, the 70% gross margin, you know, obviously we're slightly under that, but it's performing very well.
Yes, we will see continued improvement in margins. There's a different profile and a different challenge in each of the segments.
Yeah, okay. I actually more meant the actual reported dollar number. You can kind of make your own assumptions to calculate what your underlying organic GP growth was in FY 2022. I was just wondering whether or not you think that number accelerates as you invest more.
Yeah. Absolutely, Cam. We think that it does accelerate in FY 2023 relative to FY 2022, certainly.
Yep. Okay.
Well, obviously, at this point in time, I'm not providing sort of guidance, but it's certainly our view in terms of what we see that that number, you know, on an organic basis will be improved from what we reported in FY 2022.
Okay. Just last one from me. I did like. Similar to what Nick was saying, I like that you put in that seven to eight months to recover the initial marketing spend. Are you seeing any trends around how that return on investment is tracking, either improving or being diluted?
I think we've said it quite a few times, we are very sensitive to subscriber acquisition costs. We think the power of our business of being pretty equally distributed between the three segments at a sort of a growth contribution level allows us to make choices about when and how we participate in the what can often be very competitive consumer marketing space. We wanna maintain a CAC that's below industry average, materially below industry average. We dive into the market, we back off in the market depending on competitive intensity. We are getting more efficient all the time in terms of the way that we're investing our marketing return that we're getting on it, as you can see in the results.
You know, we're a bit careful about giving guidance because it depends on so many factors.
Thanks, guys.
Thanks.
Thank you. At this time, we're showing no further questions. I'll hand the conference back to Mr. Tyler for any closing remarks.
Well, I'd just like to thank everyone for joining us on the call. As I said right at the start, I see FY 2022 truly as a transformational year for the company. We've passed some major milestones. We have now, I believe, a very simple business going forward, a whole lot simpler to understand. We have momentum. We have the right leadership team. We have the right assets. We have the balance sheet that gives us a lot of optionality. We're really bullish about where that's gonna take us in FY 2023. Thank you very much for joining us and we'll speak to you all again.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.